Quantcast
Last updated on April 24, 2014 at 11:03 EDT

Streamline Health Solutions, Inc. Reports $6.7 Million Revenue; $0.6 Million Adjusted EBITDA in Q3 2013

December 12, 2013

Company Continues Transition to Recurring Revenue Business Model

ATLANTA, Dec. 12, 2013 /PRNewswire/ – Streamline Health Solutions, Inc. (NASDAQ: STRM), a leading provider of knowledge management solutions for healthcare providers, today announced financial results for the third quarter of fiscal year 2013, which ended October 31, 2013.

Revenues for the three-month period ended October 31, 2013 were $6.7 million, as compared to $6.5 million in the third quarter of fiscal 2012. Recurring revenue as a percentage of total revenue improved sequentially in the quarter to 83% from 65%. New contract bookings increased sequentially to $6.5 million dollars in the quarter, from $5.3 million last quarter.

Adjusted EBITDA for the third quarter was $0.6 million, as compared to $1.6 million in the third quarter of fiscal 2012. The Company incurred additional expense in the quarter primarily in three areas: increased headcount in sales, transition costs and additional headcount in implementation services, and expenses associated with Sarbanes-Oxley compliance. Cash on the balance sheet was $4.3 million, net of the $3.0 million outlay to license the previously announced Clinical Analytics platform from Montefiore Medical Center. Post-quarter end, the Company successfully completed a follow-on stock offering on November 27, 2013, selling 3.45 million shares of common stock at $6.50 per share. Net proceeds to the Company totaled $20,750,000.

“Our Company continues to emphasize to our clients and prospects the benefits of SaaS contracts. During the quarter our sales organization was successful in shifting a large license transaction in its quarterly forecast to a SaaS-model sales opportunity, which is expected to close by the end of our fiscal year,” said Robert E. Watson, President and Chief Executive Officer of Streamline Health.

“In addition, during the quarter, we exclusively licensed clinical analytics and population management capabilities from Montefiore Medical Center that will enable us to deliver clinical knowledge and predictive analytics to care providers prior to the act of providing care, which we believe will lead to better quality outcomes, lowered re-admission rates and improvement in their overall clinical and operational efficiency,”

Highlights for the quarter included:

    --  Revenue for the third quarter 2013 was $6.7 million;
    --  Software as a Service (SaaS) revenues for third quarter 2013 were $1.9
        million;
    --  Maintenance and support revenues for the third quarter 2013 were $3.5
        million;
    --  New sales bookings for the quarter were $6.5 million; and
    --  Backlog at the end of the quarter was $55.0 million.

Operating expenses for the three-month period ending October 31, 2013 were $7.9 million, compared to $6.8 million in the comparable prior year period, representing an increase of $1.1 million, or 15%, over the prior year comparable period due to investment in additional sales personnel, some duplicative headcount in operations as the Company transitioned its operations function from Cincinnati to Atlanta, and incremental Sarbanes-Oxley compliance costs.

Conference Call Information

The Company will conduct a conference call and webcast to review the results on Thursday, December 12, 2013 at 5:00 p.m. EST. Interested parties can access the call by dialing 888-523-1225 and then entering the passcode 1173639. A live webcast will also be available by clicking this link: http://bit.ly/1avUgzZ

A replay of the conference call will be available from Thursday, December 12, 2013 at 8:00 p.m. EST to Tuesday, December 17, 2013 at 8:00 PM EST by dialing 888-203-1112 and entering passcode 1173639.

* Non-GAAP Financial Measures

Streamline Health reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). Streamline Health’s management also evaluates and makes operating decisions using various other measures. One such measure is adjusted EBITDA, which is a non-GAAP financial measure. Streamline Health’s management believes that these measures provide useful supplemental information regarding the performance of Streamline Health’s business operations.

Streamline Health defines “non-GAAP adjusted net earnings (loss)” as GAAP net earnings (loss) plus losses on conversion of convertible notes, transaction-related expenses, and non-recurring operational costs.

Streamline Health defines “adjusted EBITDA” as net earnings (loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, significant non-recurring operating expenses, and transactional related expenses including: gains and losses on debt and equity conversions, associate severances and related restructuring expenses, associate inducements, and professional and advisory fees, and internal direct costs incurred to complete transactions.

About Streamline Health

Streamline Health Solutions, Inc. (NASDAQ: STRM) is a leading provider of SaaS-based healthcare information technology (HCIT) solutions for healthcare providers. The Company’s comprehensive suite of solutions includes: enterprise content management (ECM), business analytics, integrated workflow systems, clinical documentation improvement (CDI), and computer assisted coding (CAC). This unique combination of solutions is designed to help healthcare organizations manage the financial and operational challenges they face in the ever-changing world of healthcare today and in the future. For more information, please visit our website at www.streamlinehealth.net.

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995

Statements made by Streamline Health Solutions, Inc. that are not historical facts are forward-looking statements that are subject to risks and uncertainties and are no guarantee of future performance. The forward looking statements contained herein are subject to certain risks, uncertainties and important factors that could cause actual results to differ materially from those reflected in the forward-looking statements, included herein. These risks and uncertainties include, but are not limited to, the timing of contract negotiations and execution of contracts and the related timing of the revenue recognition related thereto, the potential cancellation of existing contracts or clients not completing projects included in the backlog, the impact of competitive solutions and pricing, solution demand and market acceptance, new solution development, key strategic alliances with vendors that resell the Company’s solutions, the ability of the Company to control costs, availability of solutions from third party vendors, the healthcare regulatory environment, potential changes in legislation, regulation and government funding affecting the healthcare industry, healthcare information systems budgets, availability of healthcare information systems trained personnel for implementation of new systems, as well as maintenance of legacy systems, fluctuations in operating results, effects of critical accounting policies and judgments, changes in accounting policies or procedures as may be required by the Financial Accountings Standards Board or other similar entities, changes in economic, business and market conditions impacting the healthcare industry generally and the markets in which the Company operates and nationally, and the Company’s ability to maintain compliance with the terms of its credit facilities, and other risks detailed from time to time in the Streamline Health Solutions, Inc. filings with the U. S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.



    Company Contact:                  Investor Contact:

    Ashley Moore                      Randy Salisbury

    Director, Marketing               Investor Relations

    (404)-446-2057                    (404)-229-4242

    ashley.moore@streamlinehealth.net randy.salisbury@streamlinehealth.net

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


                                                                  Three Months Ended              Nine Months Ended

                                                                  October 31,        October 31,
                                                                  -----------        -----------

                                                                          2013              2012           2013           2012
                                                                          ----              ----           ----           ----

    Revenues:

      Systems sales                                                   $347,532          $290,294     $2,905,846       $719,495

      Professional services                                            966,962         1,089,814      2,925,553      3,153,672

      Maintenance and support                                        3,523,551         3,148,442     10,524,595      7,797,263

      Software as a service                                          1,893,489         2,005,813      5,622,237      5,358,120

            Total revenues                                           6,731,534         6,534,363     21,978,231     17,028,550
                                                                     ---------         ---------     ----------     ----------

    Operating expenses:

      Cost of systems sales                                            611,887           717,901      1,911,609      1,936,761

      Cost of services, maintenance and support                      2,002,446         1,773,747      6,023,717      4,260,696

      Cost of software as a service                                    520,062           550,875      1,613,217      1,849,962

      Selling, general and administrative                            3,373,230         2,926,830     10,362,246      6,800,794

      Research and development                                       1,370,178           866,659      3,627,336      1,833,865
                                                                     ---------

            Total operating expenses                                 7,877,803         6,836,012     23,538,125     16,682,078

    Operating income (loss)                                         (1,146,269)         (301,649)    (1,559,894)       346,472

    Other income (expense):

      Interest expense                                                (580,390)         (895,142)    (1,734,763)    (1,494,161)

      Miscellaneous income (expenses)                               (4,510,439)           43,549     (6,316,867)        55,805

    Loss before income taxes                                        (6,237,098)       (1,153,242)    (9,611,524)    (1,091,884)

      Income tax benefit (expense)                                       4,680         3,552,879       (158,944)     3,519,879
                                                                         -----         ---------       --------      ---------

    Net earnings (loss)                                            $(6,232,418)       $2,399,637    $(9,770,468)    $2,427,995
                                                                     =========        ==========     ==========     ==========

    Less: deemed dividends on Series A Preferred Shares               (374,162)         (139,133)      (731,309)      (139,133)
                                                                                        --------       --------       --------

    Net earnings (loss) attributable to common shareholders        $(6,606,580)        2,260,504   $(10,501,777)     2,288,862
                                                                                       =========     ==========      =========

    Basic net earnings (loss) per common share                          $(0.50)            $0.18         $(0.82)         $0.20
                                                                                           =====         ======          =====

    Number of shares used in basic per common share computation     13,257,943        12,393,352     12,884,711     11,346,428
                                                                    ==========        ==========     ==========     ==========

    Diluted net earnings (loss) per common share                        $(0.50)            $0.15         $(0.82)         $0.18
                                                                        ======             =====         ======          =====

    Number of shares used in diluted per common share computation   13,257,943        15,365,238     12,884,711     12,417,256
                                                                    ==========        ==========     ==========     ==========

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

Assets


                                    October 31,        January 31,

                                                 2013               2013

    Current assets:

      Cash and cash equivalents            $4,263,991         $7,500,256

      Accounts receivable, net of
       allowance for doubtful

        accounts of $109,000 and
         $134,000, respectively             6,885,405          8,685,017

      Contract receivables                  1,387,147          1,481,819

      Prepaid hardware and third
       party software for

        future delivery                        25,463             22,777

      Prepaid client maintenance
       contracts                            1,230,073          1,080,330

      Other prepaid assets                    963,771            997,024

      Other current assets                     76,544            110,555
                                               ------            -------

            Total current assets           14,832,394         19,877,778
                                           ----------         ----------

    Non-current assets:

    Property and equipment:

      Computer equipment                    3,496,270          3,420,452

      Computer software                     2,205,941          2,196,236

      Office furniture, fixtures
       and equipment                          886,664            843,274

      Leasehold improvements                  697,570            697,570
                                              -------            -------

                                            7,286,445          7,157,532

      Accumulated depreciation
       and amortization                    (6,446,291)        (5,958,727)
                                            ---------          ---------

    Property and equipment, net               840,154          1,198,805

     Contract receivables, less
      current portion                          87,105            126,626

     Capitalized software
      development costs, net of

       accumulated amortization of
        $19,551,000 and

          $17,465,000, respectively        11,777,539         12,816,486

    Intangible assets, net                 12,044,903          8,188,131

    Deferred financing costs,
     net                                      243,622            541,740

    Goodwill                               12,344,199         12,133,304

    Other                                     543,087            383,708
                                              -------            -------

           Total non-current assets        37,880,609         35,388,800
                                           ----------         ----------

                                          $52,713,003        $55,266,578
                                            =========          =========

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

Liabilities and Stockholders’ Equity


                                                                 October 31,          January 31,

                                                                                2013                 2013

    Current liabilities:

      Accounts payable                                                    $1,601,279           $1,495,913

      Accrued compensation                                                 1,301,613            2,088,850

      Accrued other expenses                                               1,838,952            1,325,039

      Deferred revenues                                                    7,126,543            9,810,442

      Contingent consideration for earn-out, current                       4,560,000            1,319,559

      Current portion of long-term debt                                   12,750,000            1,250,000

      Current portion of deferred tax liability                                    -               35,619
                                                                                 ---               ------

            Total current liabilities                                     29,178,387           17,325,422
                                                                          ----------           ----------

    Non-current liabilities:

      Term loans, less current portion                                             -           12,437,501

      Contingent consideration for earn-out, non-current                     900,000                    -

      Contingent consideration                                             2,225,000                    -

      Warrants liability                                                   6,393,435            3,649,349

      Lease incentive liability, less current portion                         81,228               99,579

      Deferred income tax liability, less current portion                    792,506              529,709

            Total non-current liabilities                                 10,392,169           16,716,138
                                                                          ----------           ----------

            Total liabilities                                             39,570,556           34,041,560
                                                                          ----------           ----------

    Series A 0% Convertible Redeemable Preferred stock                     8,497,025            7,765,716

    Stockholders' equity:

      Common stock, $.01 par value per share, 25,000,000 shares

        authorized, 13,922,834 and 12,643,620 shares issued and

        outstanding, respectively                                            139,228              126,436

      Convertible redeemable preferred stock, $.01 par value per

        share, 1,000,000 shares authorized, no shares issued                       -                    -

      Additional paid in capital                                          50,122,185           49,178,389

      Accumulated deficit                                                (45,615,991)         (35,845,523)
                                                                          ----------          -----------

            Total stockholders' equity                                     4,645,422           13,459,302
                                                                           ---------           ----------

                                                                         $52,713,003          $55,266,578
                                                                         ===========          ===========

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


                                       Nine Months Ended

                                         October 31,
                                         -----------

                                               2013               2012
                                               ----               ----

    Operating activities:

      Net (loss) earnings               $(9,770,468)        $2,427,995

      Adjustments to reconcile
       net (loss) earnings to net
       cash

    (used in) provided by
     operating activities:

    Depreciation and
     Amortization                         3,820,098          2,847,665

    Valuation adjustment for
     warrants liability                   2,082,789                  -

    Deferred tax expense
     (benefit)                              150,634         (3,564,612)

    Amortization of debt
     discount                                     -            111,584

    Valuation adjustment for
     contingent earn-out                  4,140,441             86,839

    Share-based compensation
     expense                              1,203,919            645,407

    Net loss from conversion of
     convertible note                             -             56,682

      Changes in assets and
       liabilities, net of assets
       acquired:

    Accounts and contract
     receivables                          2,385,390         (1,351,935)

    Other assets                           (627,883)          (482,785)

    Accounts payable                         87,014           (137,107)

    Accrued expenses                       (150,206)           947,630

    Deferred revenues                    (2,683,899)           881,677

      Net cash provided by
       operating activities                 637,829          2,469,040
                                            -------          ---------

    Investing activities:

    Purchases of property and
     equipment                             (106,392)          (546,061)

    Capitalization of software
     development costs                   (1,047,938)        (1,571,420)

    Payment for acquisition              (2,875,548)       (12,161,634)
                                          ---------         ----------

      Net cash used in investing
       activities                        (4,029,878)       (14,279,115)
                                          ---------         ----------

    Financing activities:

    Net change in borrowings                      -          9,880,000

    Principal repayments on
     term loans                            (937,501)                 -

    Payment of deferred
     financing costs                              -         (1,246,107)

    Proceeds from exercise of
     stock options and stock
     purchase plan                        1,093,285            161,823

    Proceeds from private
     placement                                    -         12,000,000

    Payment of success fee                        -           (700,000)

      Net cash provided by
       financing activities                 155,784         20,095,716
                                            -------         ----------

    (Decrease) increase in cash
     and cash equivalents                (3,236,265)         8,285,641

    Cash and cash equivalents
     at beginning of period               7,500,256          2,243,054
                                          ---------          ---------

    Cash and cash equivalents
     at end of period                    $4,263,991        $10,528,695
                                         ==========        ===========

STREAMLINE HEALTH SOLUTIONS, INC.

Backlog

(Unaudited)

Table A



                  October 31,         January 31,         October 31,

                                 2013                2013                2012
                                 ----                ----                ----

    Streamline
     Health
     Software              $2,529,000          $3,416,000          $3,650,000

    Licenses

    Hardware
     and Third
     Party                     20,000             100,000              84,000

    Software

     Professional
     Services               7,141,000           4,527,000           4,348,000

    Software
     as a
     Service               17,087,000          20,439,000          19,117,000

     Maintenance
     and
     Support               28,234,000          22,504,000          21,535,000
                           ----------          ----------          ----------

        Total             $55,011,000         $50,986,000         $48,734,000
                          ===========         ===========         ===========

STREAMLINE HEALTH SOLUTIONS, INC.

New Bookings

(Unaudited)

Table B


                               Three Months
                                  Ended

                            October 31, 2013

                                  Value        % of Total

                                                Bookings
                                                --------

    Streamline Health
     Software                               $0              0%

    licenses

    Software as a service            1,856,000             28%

    Maintenance and support          4,202,000             64%

    Professional services              465,000              7%

    Hardware & third party
     software                                0              0%

        Total bookings              $6,523,000            100%
                                      ========            ===

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

Table C

This press release contains a non-GAAP financial measure under the rules of the U.S. Securities and Exchange Commission for adjusted EBITDA. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with disclosures required by generally accepted accounting principles. Non-GAAP financial measures are used internally to manage the business, such as in establishing an annual operating budget. Non-GAAP financial measures are used by Streamline Health’s management in its operating and financial decision-making because management believes these measures reflect ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, the Company believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the Company’s current financial results with past financial results. The primary limitations associated with the use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect operations. The Company’s management compensates for these limitations by considering the company’s financial results and outlook as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release. Streamline Health defines “adjusted EBITDA” as net earnings (loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, significant non-recurring operating expenses, and transactional related expenses including: gains and losses on debt and equity conversions, associate severances and related restructuring expenses, associate inducements, professional and advisory fees, and internal direct costs incurred to complete transactions.

Reconciliation of net earnings (loss) to non-GAAP adjusted EBITDA (in thousands)


    Adjusted EBITDA Reconciliation                               Three Months Ended,       Nine Months
                                                                                              Ended,

                                                                  October 31, 2013      October 31, 2012      October 31, 2013   October 31, 2012
                                                                  ----------------      ----------------      ----------------   ----------------

    Net earnings (loss)                                                        $(6,232)                2,400             (9,770)             2,428

        Interest expense                                                           580                   895              1,735              1,494

        Income tax expense (benefit)                                                (5)               (3,553)               159             (3,520)

        Depreciation                                                               152                   184                490                548

        Amortization of capitalized software  development costs                    691                   708              2,087              1,930

        Amortization of intangible assets                                          314                   229                943                254

        Amortization of other costs                                                 23                     -                 50                  -
                                                                                   ---                   ---                ---                ---

    EBITDA                                                                      (4,477)                  863             (4,306)             3,134

        Share-based compensation expense                                           378                   245              1,204                645

        Transaction related professional fees, advisory fees and

          other internal direct costs                                              138                   494                363              1,043

        Associate severances and other costs relating to

          transactions or corporate restructuring                                    -                     -                383                  -

        Other non-recurring operating expenses                                   4,514                     -              6,276                  -
                                                                                 -----                   ---              -----                ---

    Adjusted EBITDA                                                               $553                 1,602              3,920              4,822
                                                                                  ====                 =====              =====              =====

SOURCE Streamline Health Solutions, Inc.


Source: PR Newswire